Correlation Between Avantis Equity and Vanguard
Can any of the company-specific risk be diversified away by investing in both Avantis Equity and Vanguard at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Avantis Equity and Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avantis Equity ETF and Vanguard SP 500, you can compare the effects of market volatilities on Avantis Equity and Vanguard and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Avantis Equity with a short position of Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Equity and Vanguard.
Diversification Opportunities for Avantis Equity and Vanguard
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Avantis and Vanguard is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Equity ETF and Vanguard SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP 500 and Avantis Equity is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Avantis Equity ETF are associated (or correlated) with Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP 500 has no effect on the direction of Avantis Equity i.e., Avantis Equity and Vanguard go up and down completely randomly.
Pair Corralation between Avantis Equity and Vanguard
Given the investment horizon of 90 days Avantis Equity is expected to generate 1.1 times less return on investment than Vanguard. In addition to that, Avantis Equity is 1.05 times more volatile than Vanguard SP 500. It trades about 0.09 of its total potential returns per unit of risk. Vanguard SP 500 is currently generating about 0.11 per unit of volatility. If you would invest 35,345 in Vanguard SP 500 on December 5, 2024 and sell it today you would earn a total of 17,700 from holding Vanguard SP 500 or generate 50.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Avantis Equity ETF vs. Vanguard SP 500
Performance |
Timeline |
Avantis Equity ETF |
Vanguard SP 500 |
Avantis Equity and Vanguard Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Avantis Equity and Vanguard
The main advantage of trading using opposite Avantis Equity and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Equity position performs unexpectedly, Vanguard can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vanguard will offset losses from the drop in Vanguard's long position.Avantis Equity vs. Avantis International Equity | Avantis Equity vs. Avantis Emerging Markets | Avantis Equity vs. Avantis Small Cap | Avantis Equity vs. Avantis International Small |
Vanguard vs. Vanguard Total Stock | Vanguard vs. Vanguard High Dividend | Vanguard vs. Vanguard Information Technology | Vanguard vs. Invesco QQQ Trust |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |